Tribune calls off merger, blasts Sinclair for circumventing FCC rules

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Not only is it pulling out of the deal, but Tribune is suing Sinclair, arguing Sinclair's negotiations with the US Justice Department and FCC were "unnecessarily aggressive". "The complaint seeks compensation for all losses incurred as a result of Sinclair's material breaches of the merger agreement".

With the Tribune merger dead for good, Sinclair will look for other ways to acquire new stations.

"In light of the FCC's unanimous decision, referring the issue of Sinclair's conduct for a hearing before an administrative law judge, our merger can not be completed within an acceptable timeframe, if ever", said Tribune Media CEO Peter Kern, in a statement.

The $3.9 billion deal would have given Sinclair control of more than 200 local television stations broadcasting to 72 percent of the United States population, and the announcement of the proposed merger in May 2017 raised concerns about Sinclair's market dominance.

Had the merger with Tribune Media been approved, Sinclair would have completely dominated the local news market.

The FCC said Sinclair did not "fully disclose facts" about the planned sale of three stations, including pre-existing business relationships between the company and prospective buyers. In addition, Tribune said, Sinclair outright refused to sell station in some markets. Its portfolio of 42 local TV stations as well as assets such as the WGN America cable network, were viewed as attractive and will likely remain so given the company's consistent financial performance of late. It announced plans past year to merge with Chicago-based Tribune, a deal that would have given Sinclair access to 72 percent of American households. Sinclair agreed to sell off a number of stations to comply with the FCC's national ownership cap, which prohibits a single entity from reaching more than 39 percent of TV households.

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Sinclair did not immediately respond to requests for comment.

If no divestitures were made, "the combined company would reach 72 percent of United States television households and would own and operate the largest number of broadcast television stations of any station group", the FCC notes.

Tribune said in the lawsuit that the merger agreement included a clause that when seeking to divest stations, Sinclair would sell in a manner that would avoid "even the threat" of any regulatory review. Here, the WGN Radio sign appears on the side of Tribune Tower in downtown Chicago.

But constructing deals in such a way that would allow the company to maintain control or re-purchase them wasn't what Tribune had in mind.

It was admonished by media watchdogs in April after dozens of Sinclair news anchors read an identical script expressing concern about "one-sided news stories plaguing the country".